Policy changes in India sent ripple effects through the cryptocurrency market this week. In an attempt to crack down on corruption, the Indian government announced that 500 and 1000 rupee-denominated notes would be withdrawn from circulation.
Indians rushed to banks to exchange the old notes for new, as the old notes will no longer be accepted as legal tender. The window to exchange these old notes is less than two months.
Fear and uncertainty led many Indian citizens to convert rupees into bitcoin, and rupee-denominated bitcoin premiums spiked to trade almost 20% over USD-denominated bitcoin.
CryptoNinjas interprets this incident as another chink in the armor of fiat currency, as the surprising and poorly communicated government policy change in India sent its citizens scrambling to ensure their monetary security.
As currency wars and monetary policy decisions continue to increase global currency market volatility, the development and strengthening of cryptocurrencies should become even more important in the coming years.